Conditions for the Issue of Share Warrant (Section 114 of Companies Act, 1956)

A share warrant entitles the bearer thereof to the shares therein specified, and the shares may be transferred merely by delivery of the warrant. A company may provide, by coupon or otherwise, for the payment of the future dividend on the shares specified in the warrant.

Conditions for Issue of Share Warrant:

(1) Only a public company, limited by shares may issue share warrants.

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(2) The Articles of Association of the company must authorize the company to issue share warrants.

(3) Share warrants can be issued only in respect of those shares which are fully paid up.

(4) Approval of the Central Government must be obtained for issuing share warrants.

Unless the articles of the company provide otherwise, a holder of share warrant is not considered to be the member of the company. On the issue of a share warrant, the company shall strike out of its Register of Members the name of the member and then enter the facts of issuing the warrant.

A share warrant may, at any time, be surrendered by the holder to the company for cancellation, and his name can again be put on the register of members provided the Articles do not prohibit such a procedure. (Sec. 115)